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Cobalt Boats, LLC v. Sea Ray Boats, Inc.

United States District Court, E.D. Virginia, Norfolk Division

May 21, 2015

COBALT BOATS, LLC, Plaintiff,
v.
SEA RAY BOATS, INC. & BRUNSWICK CORP., Defendants.

OPINION & ORDER

HENRY COKE MORGAN, Jr., Senior District Judge.

This matter is before the Court pursuant to Defendants Sea Ray Boats. Inc. ("Sea Ray") and Brunswick Corporation's ("Brunswick"), (collectively. "Defendants"). Motion to Stay Pending Inter Partes Review of U.S. Pat. No. 8.375.880 ("Motion"). Doc. 34. For the reasons set forth herein, the Court DEFERS ruling on Defendants' Motion until the United States Patent and Trade Office ("USPTO") determines whether to institute inter partes review' ("IPR") proceedings.

I.BACKGROUND

A. Factual Allegations

This patent infringement action arises out of the alleged infringement of U.S. Patent No. 8.375.880 ("880 Patent"), owned by Plaintiff Cobalt Boats. LLC ("Plaintiff' of "Cobalt"), by Defendants. Am. Compl. at 1. 4. Sea Ray is a wholly owned subsidiary of Brunswick. Answer at 4-5. The 880 Patent was issued to Cobalt on February 19. 2013 for a "Retractable Step for Boat Swim Platform" ("Swim Step"), which is described as follows:

A retractable step for use with a boat in water comprising at least one moveable arm pivotally coupled with the boat, a step coupled with the arm such that the step is moveable between a stored position above the water surface and a deployed position below the water surface, and a lock configured to hold the moveable arm in a stationary position when the step is in its deployed position, but is releasable to accommodate movement of the step to its stored position.

Am. Compl., Ex. A at 1. Beginning in 2014, Plaintiff alleges that Defendants, two of its industry competitors, "began promoting and selling boats that include a Swim Step feature described as a submersible swim step', " which infringes upon the 880 Patent. Id. at 5.

Plaintiff contends that the Sea Ray boats with the infringing Swim Step include, but are not limited to, the Sea Ray 220 Sundeck, Sea Ray 240 Sundeck, Sea Ray 270 Sundeck, and Sea Ray 290 Sundeck. Id. at 6. Specifically, Plaintiff argues that Defendants' version of the Swim Step infringes on at least claims 1, 3, 5, and 6 of the 880 Patent. Id. at 7. On October 1, 2014, Cobalt notified Sea Ray of the alleged infringement, and to date, Sea Ray continues to manufacture, use, and sell its version of the Swim Step. Id. at 6. Defendants deny having had knowledge of the 880 Patent prior to October 1, 2014. and further deny that their products infringe upon the 880 Patient. Answer at 9-10.

A. Procedural History

Plaintiff filed the original Complaint on January 23, 2015, Doc. 1, and the Amended Complaint on February 23, 2015, Doc. 9. On April 16, 2015, Defendants' filed the pending IPR petition. Doc. 35 at 1. April 16, 2015 is also the date on which this Court entered an Order denying Defendants' Motion to Transfer Venue to the Eastern District of Tennessee. See Doc. 33 at 8. Plaintiff has three months to respond to Defendants' IPR petition, and a determination as to whether IPR will be instituted must be made by the USPTO within three months of that preliminary response. See 35 U.S.C. §§ 313, 314; 37 C.F.R. § 42.107(a). At the latest, therefore, the decision as to whether IPR will be instituted is expected by October 24. 2015, based upon an effective filing date of April 24, 2015. See Doc. 37 at 8. n.1. The Markman hearing in this matter is set for October 29, 2015, and trial is set for February 16, 2016. Doc. 32. In their memorandum, Defendants' request a six month stay until such a time as the USPTO determines whether to institute IPR. Doc. 35 at 15.

III. LEGAL STANDARDS

On September 16. 2012. the USPTO revised its "rules of practice to implement the provisions of the Leahy-Smith America Invents Act ("AIA"), " which created new IPR proceedings before the Patent Trial and Appeal Board ("PTAB"). 77 F. Reg. 48680-01 (Aug. 14. 2012). The purpose of the AIA was "to establish a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs." Id . Formerly, IPR proceedings were conducted by USPTO examiners, but post-AIA they are conducted by the PTAB, which consists of a three-member panel of administrative patent judges. 35 U.S.C. § 6. In determining whether to institute IPR proceedings, the reviewing body must determine that the petition "shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition." 35 U.S.C. § 314. If the IPR proceedings result in a final written decision by the PTAB, the petitioner is esptopped from asserting in a civil action that the applicable claims are "invalid on any ground petitioner raised or reasonably could have raised during that post-grant review." 35 U.S.C. § 325(e)(2).

Under the AIA, a party may seek a stay of a pending civil action after filing a petition for IPR. AIA § 18(b). The District Court has discretion in deciding whether to stay the action, but ...


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